2011 (6) TMI 635 - AT - Central Excise

Non-existent/fake/bogus/fictitious firm disallowance of fraudulently availed credit - Held that - M/s. Anjani International as fake and fictitious firm and on the other hand, he is imposing penalty upon the said non-existent firm, Tribunal vide its earlier orders has held that such confirmation of demands and imposition of penalties jointly and severely on various persons, is not in accordance with law, matters remanded for fresh decision, appeals get disposed off

Summary

Issues:
1. Commissioner's decision holding a firm as non-existent and imposing penalties.
2. Recovery of penalties from individuals jointly and severely.
3. Legality of imposing penalties jointly and severely.
4. Tribunal's authority to set aside impugned orders and remand for fresh decision.

Analysis:
1. The Commissioner in the present case held M/s. Anjani International as a non-existent, fake, and fictitious firm, disallowing fraudulently availed credit and imposing penalties. The impugned order detailed the disallowance of CENVAT Credit and recovery of the amount from individuals involved in creating the firm.

2. The Commissioner ordered the recovery of disallowed credit and penalties jointly and severely from Shri Tejas A. Desai and Shri Amit M. Agarwal, the alleged real creators of M/s. Anjani International. This raised the issue of whether penalties could be imposed collectively on individuals for the actions of a non-existent entity.

3. The Tribunal noted that the Commissioner's decision to impose penalties jointly and severely on individuals for the actions of a non-existent firm was not in accordance with the law. Citing precedents like the case of M/s. Shanti Processors, the Tribunal emphasized the need to fix liability on each individual separately.

4. Consequently, the Tribunal set aside the impugned orders and remanded the matters for a fresh decision, directing the fixation of liability on each individual separately. The Tribunal clarified that no opinion was being expressed on the merits of the case, indicating a procedural flaw in the Commissioner's approach.

In conclusion, the Tribunal's decision highlighted the importance of correctly attributing liability in cases involving non-existent entities and individuals. By remanding the matters for fresh decision, the Tribunal aimed to ensure a fair and lawful determination of penalties, emphasizing the need to adhere to legal principles in such cases.